Dysregulation of apoptotic pathways leads to human disease states of acquired immunodeficiency syndrome, neurodegenerative disorders, and cancer. The sphingomyelin cycle has emerged as a major player in the signaling pathways of apoptosis, cell differentiation, and cell arrest. Ceramide, a product of the sphingomyelin cycle and whose intracellular concentration is increased in response to TNFalpha treatment, causes early, potent, and specific internucleosomal DNA fragmentation, a hall mark of apoptosis. Therefore, in mammalian systems, ceramide is an important second messenger that mediates apoptosis and growth inhibition. However, little is known about direct in vivo targets of ceramide and their function in regulating ceramide effects. The search for potential targets for cermamide action led to the identification of ceramide-activated protein phosphatase (CAPP). CAPP belongs to the protein phosphatase class 2A (PP2A) and protein phosphatase class 1 (PP1) families of serine/threonine phopshatases. This project focuses on elucidating the biochemical and cellular regulation of ceramide- activated protein phosphatase. We propose to examine ceramide regulation of these phosphatases in vitro and in vivo, and what protein domains are necessary for ceramide interaction. Therefore, this proposal is designed to determine the role of ceramide in regulating protein phosphatases by answering the following questions: 1) What biochemical mechanism imparts CAPP responsiveness to natural ceramides? 2) How does ceramide interact with CAPP? 3) What is the in vivo mechanism of CAPP activation?